Which set of changes is definitely predicted to raise Real GDP in the short run?
A) Wealth increases and there is an adverse supply shock.
B) Individuals expect higher (future)incomes and wage rates fall.
C) Business taxes rise and wage rates fall.
D) The U.S.dollar appreciates and there is a beneficial supply shock.
E) none of the above

Question

Quizplus · Accepted Answer

Expectations of higher future incomes can increase current consumption, and falling wage rates can lower production costs, encouraging more output. Both factors can raise Real GDP in the short run.

Which Set of Changes Is Definitely Predicted to Raise Real